Apple's plunging stock price takes company out of $500 billion club

Apple (AAPL) has moved down from the stock market's nosebleed section.

For the first time in nearly six months, the Cupertino titan's market capitalization on Thursday dipped below $500 billion, pushing Apple out of a corporate winner's club it joined for the first time earlier this year.

As the overall markets fell, Apple shares dropped more than 2 percent, closing at $525.62 and leaving the somewhat humbled company's market cap at $494.45 billion, far below the high of nearly $660 billion it reached in September.

To some market watchers, it was inevitable that Apple's high-flying shares would eventually come back down a little bit closer to earth.

"Everybody and their dog owned or wanted to own this stock, which was always a red flag to me,'' said Jack Hillis, a San Jose investment adviser who has bought Apple shares for his own retirement portfolio since 2010, seeing his investment triple. "When it was around $680, I had clients calling me and asking 'Is it going to $1,000?' And that concerned me, because it seemed like every institution already owned it, and since most institutions are limited in the amount of a security they can hold, who were the new buyers who were going to keep pushing it higher?"

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Speculation is rampant over why Apple stock has slumped. Some blame the overall markets, which have taken a full-bore postelection body slam in recent days, starting with the Dow plunging more than 300 points the day following President Barack Obama's victory at the polls. Apple has also experienced global supply-chain kinks, struggling to meet robust demand for its wildly popular iPhone 5, introduced in early September.

At the same time, competition is mounting in the hotly contested tablet market, where Apple rivals Samsung, Google (GOOG) and Amazon are coming on strong with their own products. And Microsoft's Surface, launched in October, marks the first time the software giant is gunning for Apple on hardware, its forte. Apple's tablet market share slid 50 percent during the third quarter from 60 percent a year earlier, while Samsung more than doubled its share to 18.4 percent, according to research firm IDC.

Throw in other factors -- like investors' concerns over the Euro-zone crisis and worries that the capital-gains tax rate will rise in 2013, prompting investors to dump Apple ahead of the change -- and you've got a recipe for share-price drop.

"Apple's had a tremendous rise, but as it becomes a more mature company, we have to temper our expectations a bit," Samuels said. "But Apple's our baby -- it's in our backyard, it's sitting on tons of cash, it makes great products, and Steve Jobs was a genius, so we have a higher bar for its stock price than we do, say, for Microsoft. So when Apple trips, everyone thinks 'My god, what's going on here?'"

Staff writer Jeremy C. Owens contributed to this story.

Contact Patrick May at 408-920-5689 and follow him at Twitter.com/patmaymerc.